Developing a Model for the Network Expansion of Small and Medium Enterprises: Grounded Theory

Small and medium enterprises have several advantages over the large enterprises, including innovation, job opportunities, and more flexibility. However, these businesses may face financial, marketing, production, as well as research and development constraints due to their low resource size and structural features. These restrictions have led to very high bankruptcy rates, and therefore there are several plans to develop small and medium enterprises in many countries. In Iran, such enterprises have a significant share in the economy of the country so that they account for more than 95% of the enterprises in the country with 35% share of the total industrial employment. As a result, the development of small and medium enterprises has been emphasized in the laws and documents of the country such as the policies of the resilient economy as well as the national economic and social development programs. Therefore, given the role of small and medium enterprises in balanced economic development and also the limitations of these enterprises, the main purpose of this study is to provide a model for the expansion of the networks in the small and medium enterprises.

This qualitative research follows the interpretive paradigm and uses the inductive approach, and is regarded as a fundamental research in terms of research orientation. In this research, Strauss and Corbin’s systematic method has been used to develop the theories. The required data were collected through interviews with academic experts, the managers and consultants of the small industries organization, as well as the review of meta-documents and related reports. The theoretical sampling method was used and continued until saturation is achieved. The research data were analyzed simultaneously with the collection process through the three stages of open, axial, and selective coding.

According to the research findings, legal requirements, the importance of small and medium enterprises, and their limitations are among the main reasons and necessities of supporting small and medium enterprises. Comprehensive development of small and medium enterprises includes the development of entrepreneurship, market, human resources, technology, and network. Due to the high number and dispersion of small and medium enterprises, the development of such businesses requires the training of capable consultants and the participation of all the governmental institutions as well as private organizations. Moreover, because the development of small and medium enterprises requires a variety of specializations, it is necessary to form the development teams based on complementary specializations in order to cover a network of similar and adjacent enterprises.

Supporting small and medium enterprises, individually, is neither possible nor effective in practice due to the large number and small scale of these enterprises. Hence, the development of a network of small and medium enterprises implies the idea that it is necessary to have a network of small and medium enterprises in order to increase the effectiveness of the development interventions. Successful implementation of small and medium enterprise network development plans requires three main categories of action: developing the context, planning, and implementation. Due to the large number and the scattered nature of the small and medium enterprises, the measures of one or two governmental organizations are not enough to develop these enterprises and the use of external consulting services and the participation of all the institutions are essential as well. Therefore, the underlying actions include identifying capable consultants, training and empowering consultants, and institutionalizing and involving all the relevant bodies and institutions. It is also essential to analyze the developmental needs of the small and medium enterprises in order to determine the number of consultants, the amount of credit, and the type of facilities which are required for the development of such enterprises. The first step in implementing this scenario is to form development teams consisting of different consultants with complementary specializations. Each development team should lead the developmental programs of a similar or adjacent network.